How to Fund a Start-up Retail Business

Many UK start-up businesses are finding out that there are a plethora of funding options available. As new UK companies begin to trade they know that modern technology gives them access all over the world for their export start up.

Funding for many start-ups is limited due to the typically large amount of money required to start a business well from the start compared to the average UK or indeed London salary. However there are various ways to gain funding and we are going to compare some of them.

Crowdfunding

Crowdfunding seems to be ubiquitous across the world, offering a variety of different businesses all looking for funding and you can be one of those businesses if you want. Having taken a look myself it appears that the information available to consider investing in a business idea is limited. I would prefer to consider the management team experience and personalities, for example, before investing in a company. Clearly though, many businesses have had varying degrees of success but I wonder if this avenue is saturated or has too diverse prospects to be sure.

SEIS

Our personal preference is the Seed Enterprise Investment Scheme. It provides the right balance of motivation, control and reciprocal opportunity for businesses and investors. Making this scheme even more attractive is the fact that SEIS is promoted by the UK government.

There are several tax reliefs available with 50% of your investment available as a credit against income tax from the very start, up to £50,000 per tax year. So the average UK worker could recover up to four tax years’ worth of income tax via one SEIS company. Whereas an additional rate taxpayer could recover the majority of one years’ worth of income taxes due and invest in a company close enough to be transparent and provide input to make the company a success.

Including other additional benefits and opportunities to save unlimited tax you can read about them here. We know how to unlock these tax savings.

The creation of SEIS as the entry level version of the EIS has led to the formation of the recent EISA Awards while Green Shoots launch on the 19th is also an exciting prospect for us.

Grants

Grants are potentially a source of funding but there are select criteria in order to qualify, business plans and applications to submit, or other hurdles like deadlines or trying to find them in the first place. In addition there are some agent who charge fees just to locate and/or give you access to apply for the grants. There is the potential for grants for certain types of trades like social or other welfare entities or otherwise in certain locations largely outside of London and the South UK.

Angel Investor

Most of us have heard of Angel investors and how new ideas could peak their interest if they can see value where others cannot. The issues might be that they will request a large percentage of equity from your business. However Angel Investors also provide their business experience and help you to deliver on your objective and so if you are comfortable with this then it could well worth be something to consider.

Small Business Loan

Banks should always be the first port of call if you are looking for financing because they do have funds and they do have funding targets that they need to deliver. Typically though new businesses will fall down on the amount that they could loan from the banks.

Trading history is important and so the sooner that you start to trade and make sales then the more likely that banks will either give you a business loan or give you an overdraft. Both of these options are achievable if you are making sales with even small profits and they are also cheap financing options with no interference from any other parties. Having a business loan and or an overdraft can also be a welcome addition to any other forms of financing discussed above.

Our preference is SEIS for UK tax payers and this will give you a competitive advantage in starting your export business.